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Joi's Diary

Joichi Ito is the founder and CEO of Neoteny (www.neoteny.com), an IT investment and operating company. He has created numerous Internet companies, including PSINet Japan, Digital Garage, and Infoseek Japan. In 2000, he was ranked among the "50 Stars of Asia" by Business Week and commemorated by the MPT for supporting the advancement of IT.

HAD DINNER WITH SHIGEAKI SAEGUSA and Ryo
Hato at one of their favorite French restaurants. Saegusa-san, a composer, is one of those strange non-business people who seems to know everyone in Japanese business. Saegusa-san reported that he was currently working on a full orchestra piece approximately 45 minutes in length for the family of former Sony head Akio Morita, to be performed at his memorial event. Saegusa-san said he is doing it for free because if he charged for his time, it would end up being some ridiculously expensive endeavor that they couldn't pay for anyway. He said he gets stuck writing corporate anthems and other things for his friends. Of course, friends in high places come in handy when he is looking for corporate sponsors for his mega-operas. Ryo Hato is an amazing consultant who was one of the earlier members of McKinsey in Japan. Now he runs a small outfit called XCEED that basically does high-level consulting for companies that Hato-san happens to like. The rest of the time he spends fishing. My regular dinners with the Ryo and Shigeaki duo are always a very funny view into the amazing but true side of Japanese big businesses.

 The president of Jafco, Mitsumasa Murase, and I were invited to speak at a hearing at the Liberal Democratic Party headquarters about the necessity for change in the corporate code. The hearing was very frank and straightforward. I was allowed to complain in length about the stupid laws that assume companies have poor governance and investors who are ignorant; still use abacuses for the finance; and can't close their books more than once a year. Murase-san and I talked about all the nitty gritty that drag us down and drive my legal bills into the stratosphere. The legal professors are intent on protecting the almost geometrically perfect balance of the Japanese commercial code, which is reputed to be written in katakana and kanji from the 1800s. As usual, the politicians were annoyed about the closed process and threatened to propose a bill themselves. The MOJ promised that they would change the code in one and a half years. I got a last word in edgewise and asked for companies such as ours to be involved in the lawmaking process, and for the new laws to reflect IT enabled, best-practice-turbocharged companies instead of paper-pushing giants.

 Appeared on Hodo 2001, a weekly program on FujiTV. The show was focused on Ryu Murakami's new book, the title of which translates roughly into Exodus of the Land of Hope. It's about half a million students who drop out of junior high in 2002, use the Internet to build businesses, and move to a commune in Hokkaido, where they denounce the government. I helped Ryu come up with some of the ideas, and the main character's name is "Ponchan" Joichi, though I don't think the character is really based on me. Joining Ryu and myself was Ikuyo Kaneko of Keio University, who talked about the educational issues. The discussion drifted all over the place, but we discussed how technology was creating a communications divide between the establishment and young people. I said that if the old economy folks would be a bit more humble, it would be a lot easier for all of us to communicate.

 Met Tim Collins of Ripplewood. He and Chris Flowers have their hands on the tiller at LTCB/now Shinsei Bank. Like many foreigners who've spent a lot of time in Japan, he was very cynical about the general state of Japanese corporations, but unlike most foreigners, he's actively doing something about it. He, Chris, and a group of foreign (and some Japanese) managers are attempting to turn Shinsei into a hitherto unheard-of animal -- a Japanese bank run on Western standards. From a Japanese etiquette perspective, many of the things they are doing may appear quite rude, and the press takes swipes at them. But I think they are performing a very important market efficiency process on Japan, one that's needed right now. As the economy starts to pick up again, I think Japanese companies are starting to slow down on their restructuring. Ripplewood is a reminder that they still have a long way to go.

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